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The target for downwards movement was 1,256. Price has reached 1,260.72, 4.42 short of the target.

Summary: A low may be in place at least for the mid term for Gold. A breach of the channel on the hourly charts is required for confidence in this view. The fist target at 1,297, then 1,319 or possibly as high as 1,412.

Always trade with stops and invest only 1-5% of equity on any one trade.

New updates to this analysis are in bold.

Last monthly charts for the main wave count are here, another monthly alternate is here, and video is here.

Grand SuperCycle analysis is here.

The wave counts will be labelled first and second. Classic technical analysis will be used to determine which wave count looks to be more likely. In terms of Elliott wave structure the second wave count has a better fit and fewer problems.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

There are more than 23 possible corrective structures that B waves may take, and although cycle wave b still fits well at this stage as a triangle, it may still be another structure. This wave count looks at the possibility that it may be a double zigzag.

If cycle wave b is a double zigzag, then current upwards movement may be part of the second zigzag in the double, labelled primary wave Y.

The target remains the same.

Within intermediate wave (C), no second wave correction may move beyond the start of its first wave below 1,205.41. However, prior to invalidation, this wave count may be discarded if price breaks below the lower edge of the black Elliott channel. If this wave count is correct, then intermediate wave (C) should not break below the Elliott channel which contains the zigzag of primary wave Y upwards.

There are two problems with this wave count which reduce its probability in terms of Elliott wave:

1. Cycle wave b is a double zigzag, but primary wave X within the double is deep and time consuming. While this is possible, it is much more common for X waves within double zigzags to be brief and shallow.

2. Intermediate wave (B) within the zigzag of primary wave Y is a double flat correction. These are extremely rare, even rarer than running flats. The rarity of this structure must further reduce the probability of this wave count.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

The analysis will focus on the structure of intermediate wave (C). To see details of all the bull movement for this year see daily charts here.

Intermediate wave (C) must be a five wave structure, either an impulse or an ending diagonal. It is unfolding as the more common impulse.

It is possible that minor waves 1 and now 2 may both be over. Minor wave 2 may have ended very close to the 0.618 Fibonacci ratio. If it continues lower, then minor wave 2 may not move beyond the start of minor wave 1 below 1,205.41.

Minor wave 1 lasted 44 days and minor wave 2 may have lasted 20 days, just one short of a Fibonacci 21.

HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

The hourly charts show the whole of minute wave c as a five wave impulse.

Minuette wave (ii) may have been some kind of flat or combination. Minuette wave (iv) does not overlap into minuette wave (i) price territory, so all Elliott wave rules are met.

Minuette wave (iii) exhibits strongest momentum.

Within minor wave 3, no second wave correction may move beyond its start below 1,260.72.

This wave count requires a breach of the channel to provide strong confidence that a low is in place.

The Fibonacci ratio of equality is used for the target for minor wave 3 because minor wave 1 was a long extension.

ALTERNATE HOURLY CHART

Gold Elliott Wave Chart Hourly 2017
Click chart to enlarge.

This alternate simply moves the degree of labelling within minute wave c all down one degree.

Because minuette wave (iii) within minute wave c is slightly shorter than minuette wave (i), and minuette wave (v) is shorter still, an alternate cannot be used which moves only the degree of labelling within the fifth wave down one degree. That would see any target violate the Elliott wave rule that states a third wave may not be the shortest.

This alternate has a target that looks to be not low enough. If price remains within the channel and continues lower, then when there is more structure within minute wave c the target would be recalculated.

SECOND ELLIOTT WAVE COUNT

WEEKLY CHART

Gold Elliott Wave Chart Weekly I 2017
Click chart to enlarge.

It is still possible that cycle wave b is unfolding as a regular contracting or barrier triangle.

Within a triangle, one sub-wave should be a more complicated multiple, which may be primary wave C. This is the most common sub-wave of the triangle to subdivide into a multiple.

Intermediate wave (Y) now looks like a complete zigzag at the weekly chart level.

Primary wave D of a contracting triangle may not move beyond the end of primary wave B below 1,123.08. Contracting triangles are the most common variety.

Primary wave D of a barrier triangle should end about the same level as primary wave B at 1,123.08, so that the B-D trend line remains essentially flat. This involves some subjectivity; price may move slightly below 1,123.08 and the triangle wave count may remain valid. This is the only Elliott wave rule which is not black and white.

Finally, primary wave E of a contracting or barrier triangle may not move beyond the end of primary wave C above 1,295.65. Primary wave E would most likely fall short of the A-C trend line. But if it does not end there, then it can slightly overshoot that trend line.

Primary wave A lasted 31 weeks, primary wave B lasted 23 weeks, and primary wave C lasted 38 weeks.

The A-C trend line now has too weak a slope. At this stage, this is now a problem for this wave count, the upper A-C trend line no longer has such a typical look.

Within primary wave D, no part of the zigzag may move beyond its start above 1,357.09.

DAILY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This second wave count expects the new wave down may be deeper and longer lasting than the first wave count allows for.

A common length for triangle sub-waves is from 0.8 to 0.85 the length of the prior wave. Primary wave D would reach this range from 1,170 to 1,158.

If primary wave C is correctly labelled as a double zigzag, then primary wave D must be a single zigzag.

Within the single zigzag of primary wave D, intermediate wave (A) is labelled as a complete impulse.

Intermediate wave (A) lasted 20 days, just one short of a Fibonacci 21. Intermediate wave (B) may be about the same duration, so that this wave count has good proportions, or it may be longer because B waves tend to be more complicated and time consuming.

Intermediate wave (B) may be a sharp upwards zigzag, or it may be a choppy overlapping consolidation as a flat, triangle or combination.

HOURLY CHART

Gold Elliott Wave Chart Daily 2017
Click chart to enlarge.

This wave count also now requires a breach of the channel for confidence. The first target for intermediate wave (B) would be the 0.382 Fibonacci ratio of intermediate wave (A) about 1,297. Thereafter, the 0.618 Fibonacci ratio would be the next target about 1,319. Both targets are equally as likely. B waves exhibit huge variety in structure and price behaviour; there is no typical Fibonacci ratio for them to retrace.

Within the first five up, no second wave correction may move beyond the start of its first wave below 1,260.72.

TECHNICAL ANALYSIS

WEEKLY CHART

Gold Weekly 2017
Click chart to enlarge. Chart courtesy of StockCharts.com.

The candlestick for this week is not a Hammer reversal pattern. The lower shadow must be at minimum twice the length of the real body and this one falls short. The long lower wick is still bullish though.

The lower wick with a decline in volume for downwards movement this week does look like at least an interim low is in place.

DAILY CHART

Gold Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

A strong increase in volume for a day with the balance of volume upwards is bullish; in conjunction with a long lower candlestick wick, this looks like a low may now be in place at least for the short or mid term.

On Balance Volume is nearing resistance. This may serve to halt a rise in price and force a bounce to be more shallow.

The bottom line today for this analysis is a low is indicated as possible, but the channel on the hourly charts needs to be breached before confidence may be had in this view.

GDX

DAILY CHART

GDX Daily 2016
Click chart to enlarge. Chart courtesy of StockCharts.com.

The strong bullish candlestick for Friday is not a bullish reversal signal because it is not coming at the end of a downwards trend but instead comes within an upwards movement, which may or may not be a new bullish trend. But it is very bullish.

The long lower wick is bullish.

The last two signals from On Balance Volume are bullish. Give this indicator weight here. This supports the idea that a low is now in place for GDX.

Published @ 08:47 p.m. EST.